CitiCorp Investment Bank (Singapore) Ltd has agreed to pay ₹36 lakh to settle charges of violating SEBI FPI regulations while dealing with Symmetry Master Fund Ltd (SMFL). The violations were related to offering offshore derivative instruments (ODIs) to SMFL without completing the necessary Know Your Client (KYC) procedures that are mandatorily required in India.
As per a settlement order dated March 6, CitiCorp offered the ODI to SMFL on December 19, 2023, without completing the fresh KYC, hence violating Regulation 21(1)(c) of the FPI regulations. The KYC was done on January 10, 2024, but the regulatory fee of the ODI that was due immediately after issuance was not paid to SEBI until February 26, 2024, which was a 69-day delay. This violated Regulation 21(4) of the FPI regulations and Clause 1 of Part C of the II Schedule. Moreover, it was observed that CitiCorp Investment Bank did not have proper systems and controls in place for issuing ODIs and complying with the KYC norms thereby violating Paragraph 3(iii) of Part D of SEBI’s Master Circular. Hence the bank has agreed to pay the amount of settlement fee of ₹36 lakh and the matter is considered as closed. The bank neither accepted nor denied the charges but preferred to settle the case through the process.
This settlement shows that compliance with the regulations is essential in the Indian financial market and other financial institutions should take note of this and follow SEBI’s rules when dealing with foreign portfolio investors.
